Book notes: Zero interest rate policy and the new abnormal, by Michael Beenstock
Thesis that QE caused low r* is entertaining and infuriating in equal measure
Michael Beenstock, Zero interest rate policy and the new abnormal: a critique, Oxford University Press, 2022, xiv + 373
Some central banks began to detect a sharp drop in the equilibrium real short-term interest rate (or r*, the natural rate of interest), even before the advent of the global financial crisis.1 In Japan, the realisation that a broken banking system and excess domestic savings meant that r* had declined occurred in the 1990s. Many possible causes have been put forward: the global
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